BIG Decision Looms On Boeing’s Anti-Consumer Scheme

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Steve Pociask President, American Consumer Institute
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Last summer, many of us criticized Boeing for acting in ways antithetical to the interests of consumers with its flimsy trade complaint to the International Trade Commission (ITC) against Canada’s Bombardier. Boeing claimed that Delta’s selection of the new C Series passenger planes made by Bombardier was priced too cheaply and it represented unfair competition. The irony back then was thatBoeing, the “Mother of All Trade-Subsidy Receivers,” was complaining about unfair prices.

As I and others pointed out back then, Boeing does not even make planes of this size class nor did they bid on the Delta’s proposal, which makes the entire trade practice dispute seem a lot more about protecting Boeing and preventing competition.  Preventing Delta from its selection which would make it pay more for oversized plans, and it ultimately would serve to make consumers pay more for flying.

As time has passed, however, I did not anticipate Boeing’s position would become even more absurd. But, it has.

Two developments in recent months — the revelation of Boeing’s planned acquisition of the Brazilian plane manufacturer Embraer and the announcement of Bombardier’s partnership with Airbus to shift some C Series production to Alabama —  should dismantle Boeing’s already weak case.

The smaller plane that Delta sought to buy was C Series plane with wider seats and aisles, more headroom and larger overhead bins for luggage. They are also quieter than comparable offerings in the same market and they even have larger windows. While not a return to the halcyon era of flying pleasure of 50 years ago, the C Series planes could represent a step in the right direction — away from the “flying cattle car” experience that has become the norm. It is a differentiated product that consumer may want, and a choice that the market should have.

On top of that, Delta and other airlines regard the right-sized and more fuel-efficient C Series planes as ideally suited for its operations. The economics of flying is based in no small part on filling seats and the C Series could fit the bill. More efficient operations, we hope, would translate into more competitively priced tickets – another advantage for consumers.

On the merits, Boeing’s case was and is now even more weak. As noted, Boeing does not make a plane that competes with the C Series, and its 737 class of planes are, in some cases, too large for Delta’s needs. Not that this should worry Boeing. Global demand for 737s is strong — so strong that Boeing has over 4,000 back orders. Therefore, the idea that Bombardier’s C Series poses a threat toBoeing is not credible. Boeing never lost a sale, and it was never financially harmed by Delta’s selection.

Given all of this, Boeing’s contention that its complaint stands up for American jobs is a stretch. In September, when Bombardier announced a partnership with Airbus to undertake some of the C Series manufacturing in Alabama, Boeing’s job-protection argument melted away. Bombardier already employs thousands of Americans directly or indirectly. Expanding Airbus operations in Alabama for the C Series production would just expand its U.S. employment.

The curtain on Boeing’s machinations and intentions was pulled back late last year when it came to light that Boeing had been quietly closing a deal to acquire Brazil’s Embraer, whose E2 model could compete directly with the C Series. No wonder Boeing kept its discussions with Embraer concealed from the ITC. The obvious implication is that Boeing initiated an ITC trade complaint over the C Series to slow Bombardier’s nascent success long enough for Boeing to fortify its position in this new market niche.

With the C Series grounded here, Embraer’s small passenger planes would be the only alternative; and if Boeing acquired Embraer, Boeing would create a winner-take-all scenario for itself. The misuse of trade laws is an egregious example of crony capitalism that was supposed to be in retreat under the Trump Administration.

The ITC is to decide on January 25 whether to stick with its preliminary findings and recommend that President Trump slaps import duties of nearly 300 percent on the C Series. Considering Boeing’s collapsing case and withering credibility, this would be an outrage. The ITC and the President should stand up for American interests when others distort the marketplace and stifle innovation.

From all recent events, it appears that Boeing is engaging in distorting, anti-innovation and anti-consumer behavior, and this scheming needs to end. A victory for Boeing would be a terrible loss for consumers – and with no corresponding benefit for U.S. workers.

Steve Pociask is president of the American Consumer Institute, a nonprofit educational and research organization.  For more information, see www.theAmericanConsumer.Org or follow me on Twitter @ConsumerPal.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.


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Steve Pociask